Nicola Sturgeon: time is right to consider raising taxes in Scotland

Nicola Sturgeon has raised the prospect of tax rises for the better off in Scotland to fund a programme of higher spending, including lifting the public sector pay cap.

In an effort to reinvigorate her government after June’s poor general election result, the first minister also pledged to attempt to phase out the sale of new petrol and diesel-powered vehicles in Scotland by 2032.

Sturgeon told MSPs her government would also introduce the UK’s first deposit return scheme for plastic drinks bottles and cans; introduce roadside testing for drug-driving; establish a national investment bank, which has previously been pledged by Labour; and strengthen the powers of headteachers to run their schools.

She said her programme for government was designed to be radical and challenging. “The programme that I have set out today … is fresh, it is bold and it is ambitious – and because of that, aspects of it undoubtedly will be controversial,” she told Holyrood. “That is inevitable – indeed it is necessary. No one has ever built a better country by always taking the easy option.”

Opposition parties were scathing, saying Sturgeon’s Scottish National party was attempting to fix problems it had previously ignored or failed to solve. The SNP has been in power in Scotland for 10 years.

The Conservatives said Scottish ministers had promised 13 pieces of legislation in last year’s programme, announced in September 2016, and only three had been passed before the summer recess.

Ruth Davidson, the Scottish Tory leader, said: “If the Scottish government is to earn back the trust and respect of people in Scotland, which it has squandered in the last year, then it must change – and change fast.

“Given what we know of this Scottish government, we will wait to see whether today’s warm words are backed up by action before making a judgment.”

Alex Rowley, Scottish Labour’s interim leader, said that under the SNP there were 4,000 fewer teachers and larger classes, hospital waiting time targets were being missed and there had been inadequate reforms to local government taxation. He acknowledged, however, that Labour supported some of Sturgeon’s proposals.

“There are positive measures in the government’s programme today, but there are still huge challenges facing Scotland that are not addressed,” Rowley said. “We will work with the government where we can, we will hold them to account and we will bring forward the ideas to tackle the big challenges for Scotland.”

The legislative programme, A Nation With Ambition, is intended to re-establish the SNP’s credibility with voters after it lost about 480,000 votes and 21 seats in June’s general election.

That included defeats by the Tories across the former SNP stronghold of north-east Scotland and unexpected Labour gains in central Scotland, in part because of Jeremy Corbyn’s surge in popularity.

Sturgeon’s critics said voters had punished the SNP for using Brexit as a pretext for a fast second independence referendum and for its timidity on domestic issues. The first minister acknowledged voters had deserted the SNP, and she soon dropped the quest for a second independence vote by spring 2018.

Sturgeon sought to sidestep Scottish Labour, the Scottish Liberal Democrats and the Greens by offering to start talks on raising taxes. All three opposition parties have called for a new top rate of income tax of at least 50p.

She invited them to talk about tax changes before this year’s draft budget is published in November, and promised to publish a detailed paper analysing the tax system and the impact of opposition proposals.

“We know that continued Westminster austerity, the consequences of Brexit and the impact of demographic changes will put increasing pressure on our public services and on our ability to provide the infrastructure and support that our businesses need to thrive,” she said.

“So the time is right, in my view, to open a discussion about how responsible and progressive use of our tax powers could help build the kind of country we want to be – one with the highest-quality public services, well-rewarded public servants, good support for business, a strong social contract and effective policies to tackle poverty and inequality.”

She confirmed the Scottish government would scrap the public sector pay cap, set at 1%, mirroring indications that the UK government will soon do so. The SNP voted down a Labour motion to scrap the cap before June’s election, but has faced threats of strikes by the Royal College of Nursing and revolts by other public sector unions over pay.

The electric vehicle strategy remains uncosted and lacking in detail but sources with a knowledge of the government’s thinking said Sturgeon had embraced the policy, which is designed to beat the UK target date of 2040. “Climate change innovation is at the heart of her personal agenda,” said one source.

Sturgeon said her government’s “aim is for new petrol and diesel cars and vans to be phased out in Scotland by 2032”. The government paper says it wants to “phase out the need” for petrol and diesel by 2032.

Scotland has been slow to phase in electric vehicles. But Sturgeon said the A9, the trunk road linking central Scotland to Inverness and the far north, would become the country’s first “electric highway”, low-emission zones would be established in Scotland’s four largest cities and there would be a sharp increase in the number of electrical charging points.

Scottish ministers and officials admit privately that a wholesale shift to electric vehicles will be very challenging and expensive, and have yet to work out a clear implementation strategy, particularly in cities with high-density tenements and in sparsely populated rural areas.

Richard Dixon, the chief executive of Friends of the Earth Scotland, said this was the greenest legislative programme published by a Scottish government, and he applauded its ambition.

“Phasing out new petrol and diesel vehicles is a big step forward for tackling air pollution and climate change emissions,” he said. “Setting a date of 2032 puts Scotland among the most ambitious countries in the world on vehicle electrification, and the announcement of an A9 electric superhighway also sends a very important signal on the future of motorised transport in Scotland.”